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Qualifying for a student loan

The countdown to college has began, but there's still time to secure that student loan, even as credit standards tighten.

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By Gerri Willis, CNN

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NEW YORK (CNNMoney.com) -- The student loan market is rejecting more applicants because of too-low credit scores, but the market is still advancing money, even as colleges prepare to resume classes. Some tips from CNN's Gerri Willis on how to nab a loan.

1. Get the stats

It's estimated that 100,000-250,000 of would-be borrowers could be turned down for private student loans this year. And that has to do with a few things.

First, lenders have tightened their standards. Previously if you had a credit score of 620-650, you would be eligible for a loan. But today, you'll likely need a credit score between 680 and 700 according to Mark Kantrowitz of Finaid.org.

And many more parents are also being turned down for PLUS loans. That's because if parents had a foreclosure on their record within the past five years, they won't qualify for this kind of loan.

2. Improve your credit

Let's face it, kids going into college from high school have a very thin credit history. First, check your credit report at AnnualCreditReport.com.

After that, the student can either opt to become an authorized user on their parent's credit card or they can have a parent co-sign a credit card with them. This way, the student has the benefit of an older, more established credit history.

One note here: you want to make sure the co-signer has a credit score of over 700. Keep in mind that who ever co-signs the credit card is equally responsible for the debt. By using a co-signer you increase your chances of getting a loan with better terms.

3. Know where to go

Make sure you go to Uncle Sam first. If you qualify for federal aid, you will get it, says Kevin Walker of Simpletuition.com.

Plus, federal student loans have lower interest rates. You may be eligible for up to $31,000 in Stafford loans if you're a dependent undergrad, and $57,500 if you're an independent undergrad. Your credit won't be checked for this.

If your parents have been denied a PLUS loan, you automatically qualify for more money thorough the Stafford Loan Program.

You should also go to your student aid office if you're having trouble securing a loan. They will know who is lending and who isn't. "They have a daily finger on the pulse of who is making the changes," says Walker.

If you think you're going to have trouble making your tuition bill, talk to the bursar's office. Some schools have tuition installment plans. This spreads out your payments from 9-12 months. You may have to pay a one-time fee of $50-$100 says Kantrowitz.

4. Compare deals

You want to make sure you do your homework. So, check out websites like estudentloan.com or simpletuition.com. Try calling the lenders and asking what kind of rate you would get with your current credit score.

Some lenders may give you a ballpark estimate without having to fill out an application. But keep in mind that advertised rates may be reserved for people with great credit. While you're comparing terms make sure you note how long the repayment rate is says Walker.

Remember, the longer the repayment, the lower your monthly bill, but the more you'll pay in interest over the life of the loan. To top of page

Gerri's Mailbox: Got questions about your money? We want to hear them! Send e-mails to toptips@cnn.com or click here - each week, we'll answer questions on CNN, Headline News and CNNMoney.com.
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